In four separate stories from yesterday's edition of the King Report...IBM to lay off 6-8,000 employees world-wide. CAT will lay off one third of its workers in Wisconsin..."With lower orders from mining customers, we must take steps to bring production in line with demand." Chrysler to freeze salaried employee's pensions in effort to limit liability..."Chrysler plans to freeze pensions for 8,000 salaried employees at the end of the year, the automaker announced Friday, joining a growing group of companies seeking to limit the amount of money they have to set aside now for future retirees." Some of Detroit's Creditors are Asked to Accept Pennies on the Dollar. "...deep cuts alone cannot save Detroit...painful sacrifices must be shared. The proposal includes an offer that amounts to less than 10 cents on the dollar on some of the city’s unfinanced debt obligations."
European Union car sales in May fell to a 20-year low as rising joblessness caused by a recession in the euro region contributed to falling demand at PSA Peugeot Citroen, Renault SA and General Motors Co.
Registrations in the 27-member EU dropped 5.9 percent to 1.04 million vehicles from 1.11 million cars a year earlier, reaching the lowest level for the month since 1993, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. The drop contrasts with 1.7 percent growth in April that was the first gain in the market in 19 months. Including figures from Switzerland, Norway and Iceland, sales in May fell 5.9 percent to 1.08 million cars.
“Nobody’s buying cars,” and there’s “no reason to be optimistic,” as the sales increase the previous month was because of a calendar effect, Jens Schattner, a Frankfurt-based analyst at Macquarie Group Ltd., said before the ACEA released figures. Any revival in deliveries won’t start until the end of the third quarter at the earliest, he said.
This Bloomberg story was filed from Paris early this morning Europe time...and was posted on their website at midnight last night MDT...and it's the first of two in a row from U.A.E. reader Laurent-Patrick Gally.
The Serious Fraud Office is poised to bring criminal charges against former Citigroup Inc and UBS AG trader Thomas Hayes, who is alleged to have been a central figure in a scam to rig global benchmark interest rates, a source familiar with the situation said on Monday.
The SFO was expected as soon as Tuesday to charge Hayes, following the London interbank offered rate rigging scandal, which has rocked the financial industry from the United States to Japan, the source said.
Regulators allege Hayes and others made thousands of unlawful requests to colleagues to submit false Libor rates, colluding with other banks and at least five interdealer brokers to spread false information and influence others.
This Reuters story was posted shortly after midnight in London earlier this morning...and it's the second story in a row from Laurent-Patrick Gally.
The plan makes Co-operative Bank appear much more like a bank than a mutual organisation.
An announcement between the bank and the Prudential Regulation Authority could come within the next few hours.
Under such a rescue deal, it is unlikely that taxpayer money will be required or that savers will be affected, but it could affect up to 5,000 smaller investors.
Concerns about the bank's capital arose after a deal with Lloyds collapsed.
OK...who's next? Today's first story was posted on the bbc.co.uk Internet site early Sunday evening when nobody was looking...and I thank U.K. reader Tariq Khan for sending it our way.
A top U.S. banking regulator called Deutsche Bank's capital levels "horrible" and said it is the worst on a list of global banks based on one measurement of leverage ratios.
"It's horrible, I mean they're horribly undercapitalized," said Federal Deposit Insurance Corp Vice Chairman Thomas Hoenig in an interview. "They have no margin of error."
Hoenig, who is second-in-command at the regulator, said global capital rules, known as the Basel III accord, allow lenders to appear well-capitalized when they are not. That is because the rules allow the banks to use complicated measurements of how risky their loans are to determine the capital they must hold, he said.
This Reuters story was picked up by CNBC in the wee hours of Saturday morning...and I thank Laurent-Patrick Gally for bringing it to our attention.
The espionage scandal that keeps on giving has released its latest installment, once more courtesy of The Guardian, which on the eve of tomorrow's starting G-8 meeting reveals that foreign politicians and officials who took part in two G-20 summit meetings in London in 2009 had their computers monitored, their phone calls intercepted, and fake internet cafes were set up on the instructions of the British Government Communications Headquarters, the sister organization to the U.S. NSA.
Naturally, it wasn't just the GCHQ - according to The Guardian, during the 2009 G-20 meeting there was an NSA attempt to eavesdrop on then-Russian leader, Dmitry Medvedev, as his phone calls passed through satellite links to Moscow.
And while broad espionage allegations can be deflected by pretending by the rhetoric-endowed and teleprompter-aided that only terrorist threats were targeted, it will be very difficult to explain why the national information super spooks used every trick of the trade to spy on the so-called leaders of the developed world.
This rather explosive story made an appearance on the Zero Hedge website late Sunday evening...and I thank Matthew Nel for finding it for us.
It started badly and then got worse. To begin with President Putin and his delegation were late. Their plane into the UK was delayed and when they did finally arrive at Downing Street, they had to be taken in through the back entrance to avoid a Turkish protest taking place on Whitehall. You could imagine Putin musing that you wouldn’t see that happening in Moscow.
After the obligatory forced smiles for the camera outside Number 10, Mr Putin and David Cameron got down to business.
Except rather than the one-to-one talks that the British had been expecting earlier in the week, the Russians had decided to bring along their Foreign minister Sergey Lavrov to join the party. So a tête-à-tête became a foursome, with diplomatic protocol dictating that William Hague also be included in the talks. There was going to be no repeat for Mr Cameron of his “productive” private talks last month.
What went on in the meeting was, of course, private but what was clear to everyone at the press conference afterwards was that the Russian President was not in a happy mood. Smaller than Cameron...but stocky...Putin managed to carry off an air of menace effortlessly.
This news item showed up on the independent.co.uk Internet site on Sunday as well...and I thank U.K. reader Tariq Khan for sending it along.
Russian President Vladimir Putin faced further isolation on the second day of a G8 summit on Tuesday as world leaders lined up to pressure him into toning down his support for Syrian President Bashar al-Assad.
Following an icy encounter between the Kremlin chief and U.S. President Barack Obama late on Monday, the G8 leaders will seek to find resolution to a war that has prompted powers across the Middle East to square off on sectarian lines.
The sticking point again will be Putin, who faced a barrage of criticism from Western leaders for supporting Assad and the Syrian's president's attempt to crush a 2-year-old uprising in which at least 93,000 people have been killed.
"It's a clarifying moment to see what kind of commitments the Russians are willing to make in a leading world forum," a British official said before the leaders met for dinner at a remote, heavily guarded golf course outside of Enniskillen.
Here's another prime example of the pots calling the kettle black. This Reuters piece was filed from Enniskillen in Northern Ireland early yesterday evening EDT...and it's another story courtesy of Laurent-Patrick Gally.
Turkey, South Africa and Russia have reacted angrily to the British government demanding an explanation for the revelations that their politicians and senior officials were spied on and bugged during the 2009 G20 summit in London.
The foreign ministry in Ankara said it was unacceptable that the British government had intercepted phone calls and monitored the computers of Turkey's finance minister as well as up to 15 others from his visiting delegation. If confirmed, the eavesdropping operation on a Nato ally was "scandalous", it added.
The ministry summoned the UK's ambassador to Ankara to hear Turkey's furious reaction in person. A spokesman at the foreign ministry read out an official statement saying: "The allegations in the Guardian are very worrying … If these allegations are true, this is going to be scandalous for the UK. At a time when international co-operation depends on mutual trust, respect and transparency, such behaviour by an allied country is unacceptable."
This must read article appeared on The Guardian's website late yesterday afternoon BST...and it's courtesy of Roy Stephens.
The threat of imprisonment or murder will not stop the truth from coming out, Edward Snowden, the whistleblower who blew the lid on the massive National Security Agency surveillance program, told The Guardian in a live Q&A.
The 29-year-old former NSA contractor in conjunction with Glenn Greenwald, The Guardian journalist who broke the story on the NSA’s two controversial data-collection programs which targeted Americans and foreign allies alike, took questions online regarding the fallout from the massive intelligence leak.
Edward Snowden kicked off the session by describing the targeted campaign by the US government to paint him as a traitor, “just as they did with other whistleblowers." The smear campaign, he argues, has destroyed the possibility of a fair trial at home. In this regard, his decision to leave the United States was not based on any desire to evade justice, especially since he believes he can “do more good outside of prison.”
This longish news item from Russia Today is well worth reading...and it was posted on their website mid-afternoon Moscow time. I thank Roy Stephens for this story.
Syria and Egypt are dying. They were dying before the Syrian civil war broke out and before the Muslim Brotherhood took power in Cairo. Syria has an insoluble civil war and Egypt has an insoluble crisis because they are dying. They are dying because they chose not to do what China did: move the better part of a billion people from rural backwardness to a modern urban economy within a generation. Mexico would have died as well, without the option to send its rural poor - fully one-fifth of its population - to the United States.
It was obvious to anyone who troubled to examine the data that Egypt could not maintain a bottomless pit in its balance of payments, created by a 50% dependency on imported food, not to mention an energy bill fed by subsidies that consumed a quarter of the national budget. It was obvious to Israeli analysts that the Syrian regime's belated attempt to modernize its agricultural sector would create a crisis as hundreds of thousands of displaced farmers gathered in slums on the outskirts of its cities. These facts were in evidence early in 2011 when Hosni Mubarak fell and the Syrian rebellion broke out. Paul Rivlin of Israel's Moshe Dayan Center published a devastating profile of Syria's economic failure in April 2011. 
Sometimes countries dig themselves into a hole from which they cannot extricate themselves. Third World dictators typically keep their rural population poor, isolated and illiterate, the better to maintain control. That was the policy of Mexico's Institutional Revolutionary Party from the 1930s, which warehoused the rural poor in Stalin-modeled collective farms called ejidos occupying most of the national territory. That was also the intent of the Arab nationalist dictatorships in Egypt and Syria. The policy worked until it didn't. In Mexico, it stopped working during the debt crisis of the early 1980s, and Mexico's poor became America's problem. In Egypt and Syria, it stopped working in 2011. There is nowhere for Egyptians and Syrians to go.
This short essay was posted on the Asia Times website yesterday...and is worth reading. It's another offering from Roy Stephens, for which I thank him.
Iran will deploy 4,000 Revolutionary Guards to Syria to bolster Damascus against a mostly Sunni-led insurgency, media reported. Meanwhile, U.S. F-16s and Patriots will stay in Jordan – speculatively, to help establish a no-fly zone to aid Syrian rebels.
The deployment of the first several-thousand strong military contingent was reported by The Independent on Sunday who quoted Iranian sources tied to the state’s security apparatus. The sources said the move signals Iran’s intention to drastically step up its efforts to preserve the government of President Bashar Assad.
The Islamic Republic’s heightened military commitment could reportedly extend to the opening up of a new “Syrian” front on the Golan Heights against Israel.
The thin edge of the war wedge in the Middle East is showing signs of growing thicker in a hurry. This Russia Today story was filed from Moscow late Sunday evening local time...and it's courtesy of Roy Stephens once again.
Thousands of protesters took to the streets of Brazil's biggest cities, Rio de Janeiro, Sao Paulo and the capital Brasilia, on Monday evening to protest the rising cost of public transport, corruption and heavy-handed police tactics.
In the city of Belo Horizonte, police clashed with protesters and fired tear gas to disperse crowds, Brazil's Globo TV reported.
The governor of Brazil's richest and most industrialized state Sao Paulo called the protesters "troublemakers."
The demonstrations began last week after a 0.20 Brazilian real ($0.10) increase in bus fares.
This CNBC story appeared on their website early yesterday evening...and it's another contribution to today's column from Laurent-Patrick Gally.
China's shadow banking system is out of control and under mounting stress as borrowers struggle to roll over short-term debts, Fitch Ratings has warned.
The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.
"The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation," said Charlene Chu, the agency's senior director in Beijing.
"There is no transparency in the shadow banking system, and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is, and this undermines signalling," she told The Daily Telegraph.
This sounds very similar to what Doug Noland was saying in his Credit Bubble Bulletin from last Friday. This particular story is an Ambrose Evans-Pritchard offering...and it was posted on The Telegraph's website on Sunday afternoon BST...and I thank Roy Stephens for bringing it to my attention...and now to yours.
1. Dr. Stephen Leeb: "Massive Demand to Send Price of Silver Skyrocketing". 2. Rick Rule: "Gold, Silver and Institutional Investors Who Are Terrified". 3. Michael Pento: "Expect Panic and Devastation as Control of Markets is Lost". 4. Robert Fitzwilson: "Fed and Other Central Planners to Enact Frightening Solutions". 5. Richard Russell: "The Great Gold Rip-Off, China, Russia and Silver". 6. The first audio interview is with Gerald Celente...and the second audio interview is with Egon von Greyerz.
With the Indian rupee plumbing new lows against the US dollar and the country’s current account deficit at record levels, the Reserve Bank of India (RBI) is taking the easiest route to tackle both; it has declared a war on gold. Our Chart of the Week shows the Indian current account deficit from 1970 to the end of 2012. As you can see, it has hit a record deficit level and continues to weaken. Put simply, a current account deficit occurs when a country's total imports of goods is greater than its total export of goods; this situation makes a country a net debtor to the rest of the world. India is the largest consumer of gold, almost all of which is imported and is a significant contributor to this deficit.
The RBI has drawn the battle lines and targeted gold imports as the main culprit. The central bank has announced a series of measures over the past month, including restraining lending against gold-backed assets, and restricting gold imports. The hike in gold import duty to 8% this month is the most recent announcement in this drive and doubles the duty that was applied at the beginning of this year. The RBI has asked bank trading houses not to import gold on a consignment basis for domestic sales, further insisting on 100% cash margin for letters of credit. The restrictions were invoked after imports soared to 162 tonnes in May from 142 tonnes in April on the back of weak international prices. In their campaign against gold imports the Indian finance minister P. Chidambaram has even urged banks to advise their customers not to invest in gold. “I think the Reserve Bank has advised banks that they should not sell gold coins,” said Chidambaram, while speaking at an event in Mumbai.
This very short must read commentary by David Franklin was posted on the sprottgroup.com Internet site yesterday. The chart alone is worth the trip.
There has been considerable throughput of gold in western capital markets, with substantial buying from all round the world following the April price crash. The supply can only have come from two sources: the general public, or one or more governments. It really is that simple. Two months later the gold price has only partially recovered, so physical supplies have continued to be made available. Physical demand cannot have been entirely satisfied by ETF liquidations, confirming governments are involved. This article looks at the dynamics of the gold market around this event and the implications.
While the investing public in the western nations has been generally stunned following the April price smash, demand from Asia is running at record levels.
The increase in deliveries for April and May was spectacular, totalling 460.5 tonnes, with the week ending 26 April alone seeing phenomenal deliveries of 117 tonnes. In addition, according to the Economic Times, India imported 142.5 tonnes in April and 162 tonnes in May, compared with an average monthly rate of 86 tonnes in Q1 2013. Therefore these two countries imported 765 tonnes of gold in two months, before considering any unofficial imports or their government purchases in foreign markets. The rest of Asia, from Turkey to Indonesia would certainly have stepped up their demand for gold as well, as did the western world itself for physical metal as opposed to paper entitlements.
This extensive commentary by Alasdair Macleod was posted on the goldmoney.com Internet site on Sunday...and I found it in a GATA release yesterday.
The junior resource sector is struggling financially, something most investors seem to agree on – and rightly be wary of. Here at Casey Research, we've analyzed both producers and explorers to see how profitable (or value-adding) they may be under current market conditions. The rather obvious conclusion, shared by many company executives, is that now is the time to be frugal.
Producers have started to focus on cutting costs and pulling back from development projects that have diminished prospective returns or otherwise unacceptable risk profiles.
Developers have sinned in their own way, too: as gold prices rose year after year, the price assumptions used in economic studies likewise went higher and higher. Some used assumptions that were too optimistic. And now that trend is coming back to bite them – as well as any investor who buys into those assumptions.
Naturally, when the gold price continued rising, it seemed to justify using a higher gold price when calculating how profitable a mine might be. This worked well to persuade banks to loan money and investors to buy stock, and some mines were built without enough consideration of a protracted price reversal, which has caught less prepared companies and investors off guard.
This commentary is the Monday edition of the Casey Daily Dispatch...and it was posted on the CR website yesterday afternoon.
The mainstream financial news media's propaganda campaign against gold has gotten more intense than ever even as evidence abounds that gold -- the metal, not the paper labeled "gold" -- is in greater demand than ever. That's what Jeff Nielson of Bullion Bulls Canada writes in his commentary today, "Gold-Bashing Mythology Hits New Crescendo".
This is another precious metal-related story that I found embedded in a GATA release yesterday...and I thank Chris Powell for wordsmithing the introductory paragraph.
Eric Sprott, president and CEO of Sprott Asset Management, says extreme physical demand for gold and silver is draining supplies. Sprott predicts, "Somebody's going to fail here. All the data I look at says the Western central banks. . .that have been selling gold are running on fumes now...so, it's very close at hand."
This 17:51 minute audio interview with Eric was posted over at theaureport.com Internet site on Sunday...and I thank Roy Stephens for his final offering in today's column.
A record deficit in platinum supplies is set to push prices higher, as unrest sweeps the South African mining industry and demand is boosted by the auto sector and a new exchange traded fund (ETF), according to HSBC.
Platinum, which has been influenced by the wild swings in the price of gold since April this year, hit a six-week high of $1,531 earlier this month following the "highly successful" launch of a new physically backed ETF. According to James Steel, chief precious metals analyst at HSBC, prices will rise further over the next two years, as the risk of South African mining strikes weigh on output.
But Steel also cut his price target on the metal because platinum had been influenced more than he had anticipated by the sharp swings in the price of gold.
It's interesting to see the platinum/palladium shortage story show up in the main stream press...which is the only reason I'm posting it here, as it's already yesterday's news for most precious metal investors. This CNBC story was picked up by the finance.yahoo.com Internet site yesterday...and my thanks go out to West Virginia reader Elliot Simon for sharing it with us.
In the past few days people have finally started paying attention to a funny thing going on in the market.
Time after time ahead of major news, there seems to be someone who knows something before it happens — there seem to be trades that hit too hard and fast before the news is actually made.
This has been going on for a while, and people are finally starting to understand why.
The current target of collective ire is Thomson Reuters. There was some shady trading ahead of the Consumer Confidence number at the end of last month. About a quarter of a second before the number was released, there was an eruption of orders in the SPDR S&P Sector ETF (SPY), the e-Mini (electronically traded futures), and in hundreds of stocks, according to Nanex, a market research firm.
This very interesting article was posted on the businessinsider.com Internet site during the New York lunch hour on Thursday...and I thank Casey Research's own Bud Conrad for today's first story.
The monthly TIC (foreign capital flows) data gets less respect than it should. Perhaps it is because it is two months delayed, or perhaps due to the Treasury Department labyrinth one has to cross in order to figure out what is going on. Either way, for those who do follow the data set, will know by now that in April, foreign investors, official and private, sold $54.5 billion. Why is this number of note? Because it is the biggest monthly sale of Treasurys by foreigners in the history of the data series.
This Zero Hedge story from yesterday is courtesy of reader 'David in California'...and the chart is worth a quick peek.
Thanks to the Federal Reserve's massive quantitative easing program, banks have more money than they know what to do with.
So they're parking much of their cash at the Fed, where they receive a 0.25 percent interest rate. Indeed, bank deposits at the Fed have topped $1 trillion, reaching that record level in April, Fortune reports.
But while bank reserves at the Fed are soaring — up 25 percent, or $200 billion, in the first quarter alone — lending slumped during that period.
Concerns about the deposit bulge are twofold. First, money that is parked at the Fed is doing nothing to help the sluggish economy. Second, what happens to the deposits when the Fed reverses its QE?
This moneynews.com article was posted on their website early on Friday morning...and it's worth skimming. I thank West Virginia reader Elliot Simon for sending it.
Illinois added nearly three times more people to its food stamp program than it added in jobs over the past year – just another confirmation that the state’s economic model is failing.
Between February 2012 and February 2013, Illinois added nearly 200,000 new enrollees to the Supplemental Nutrition Assistance Program, or SNAP. In contrast, Illinois added only 68,400 non-farm payroll jobs during that same time period.
This disappointing news comes on top of the most recent Bureau of Labor Statistics labor release that reported Illinois has the second-highest unemployment rate in the nation. At 9.3 percent, the state’s unemployment rate is significantly higher than the 7.6 percent national average.
Poor job creation is causing Illinoisans’ dependence on food stamps to rise. The U.S. Department of Agriculture reported that in February 2013, Illinois was the only state in the country to report a year-on-year, double-digit increase in the number of people signing up for food stamps.
This short story was posted on the illinoispolicy.org Internet site on Wednesday...and I found it in yesterday's edition of the King Report.
Japanese policymakers have really mucked things up. The Nikkei sank 6.5% Thursday and was down 1.5% for the week. Perhaps it’s a little early to pronounce the BOJ’s “shock and awe” monetary experiment a failure. The yen rallied 3.5% this week against the dollar. Against the Philippine peso its was up 4.5%, versus the South Korean won 4.1%, the Indian rupee 4.31%, the Malaysian ringgit 4.0%, the Indonesian rupiah 3.2%, the Argentine peso 3.9% and the Brazilian real 4.2%. Indonesia raised rates to support its weak currency. The yen “carry trade” (sell yen and use proceeds to buy higher-yielding instruments globally) is doling out painful losses – forcing the unwind of leveraged trades across many markets. I wouldn’t be surprised if the yen short is the largest short position in modern history. The yen bears are now running for cover – causing all kinds of havoc in the currencies and securities markets.
“Emerging” Asian markets are in the middle of an unfolding financial storm. Friday’s 2.1% gain cut the Philippine’s loss for the week to 9.2%. Even with Friday’s 4.4% recovery, the Thailand stock exchange ended the week down 3.4%. South Korea’s Kospi dropped 1.8%.
Latin America is as well caught in troubling dynamics. Brazil’s currency (real) trade to a four-year low against the dollar this week – despite currency interventions and the removal of taxes on financial flows and currency derivatives. Brazilian equities were hit for 4.4% this week, increasing y-t-d losses to 19.1%. Mexican stocks dropped 2.4%, boosting y-t-d losses to 10.2%.
Another absolute must read from Doug Noland that was posted on the prudentbear.com Internet site yesterday evening...and I thank reader U.D. for bringing it to our attention.
According to leaked NSA documents published by The Guardian last week, the United States National Security Agency is conducting dragnet surveillance of the communications of Americans, regularly receiving phone records for millions of Verizon customers while also being capable of accessing the conversations that occur over Facebook, Google and several other major Internet names through a program called PRISM. Now a 28-year-old artist and developer from Brooklyn, New York has found a fun way of warning computer users about potential government surveillance, and he’s incorporated one of the best-selling rock albums ever in the process.
Justin Blinder released a plug-in for the Web browser Firefox this week, and he’s already seeing a positive response in the press if not just based off of the idea alone. His “The Dark Side of the Prism” browser extension alerts Web surfers of possible surveillance by starting up a different song from Pink Floyd’s 1973 classic “The Dark Side of the Moon” each time a questionable site is crossed.
Blinder told the Guardian that he built the program over the course of four hours with the hopes he could "create some sort of ambient notification that you are on a site that is being surveiled by the NSA."
This Russian Today article was posted on their website early on Friday evening Moscow time...and it's courtesy of Marshall Angeles.
Facebook Inc. and Microsoft Corp. said they received thousands of warrants for data from government entities in the U.S. during the second half of 2012.
Facebook received 9,000 to 10,000 requests, while Microsoft got 6,000 to 7,000, their legal executives said in blog posts yesterday. The companies, seeking to reassure users that authorities don’t have unfettered access to personal details, said the numbers are a “tiny fraction” of their user bases.
Google Inc., Facebook and Microsoft asked the U.S. government for more leeway this week to report aggregate numbers of data requests, following reports that the U.S. National Security Agency is collecting millions of residents’ telephone records and the Web communications of foreigners under court order. While the companies have denied giving authorities direct access to their systems, thousands of technology, finance and manufacturing businesses are swapping intelligence with security agencies, four people familiar with the process said.
This Bloomberg item was posted on their website very late last night...and I thank U.A.E. reader Laurent-Patrick Gally for sliding it into my inbox at 5:01 a.m. EDT this morning.
U.S. troops will soon leave Afghanistan. Al-Qaeda is in shambles. What reason is there for Congress to abdicate responsibility for declaring war?
Last month, I argued that the time has come for Congress to repeal, or "sunset," its sweeping "Authorization for Use of Military Force" (AUMF) enacted just three days after the Twin Towers fell on September 11, 2001. The legislative "blank check" given to the executive branch to wage the War on Terrorism -- a measure enacted while fires at the World Trade Center and Pentagon were still smoldering -- has been, as diplomats used to say, "overtaken by events."
This morning, 4,288 days after the AUMF was enacted, Rep. Adam Schiff, a California Democrat and member of the House Permanent Select Committee on Intelligence, introduced legislation in Congress to sunset the measure on December 31, 2014, a date chosen to coincide with the withdrawal of American combat troops from Afghanistan. The proposal is a serious bit of business and warrants timely and serious consideration on Capitol Hill.
This is a must read for all serious students of the New Great Game. It was posted in The Atlantic on Monday...and I've been saving it for today. My thanks to Elliot Simon for digging it up for us.
Iceland's bid to join the EU is over, the country's foreign minister told the European Commission on Thursday (13 June).
"This is how democracy works," said Gunnar Bragi Sveinsson, on his first overseas trip, three weeks after being appointed to the recently elected Icelandic government.
He pointed out that both parties in the new government had campaigned against EU accession.
He commented that the main purpose of the trip had been "to tell the commission that the new government has made decision to put negotiations on hold.
This story was posted on the euobserver.com Internet site early yesterday morning...and it's Roy Stephens' first offering in today's column.
The United States may have administered one of the biggest-ever snubs to the Kremlin in the post-Cold War era with the White House announcement on Thursday that it will provide military support to the Syrian rebels.
The U.S. President Barack Obama is scheduled to meet Russian President Vladimir Putin on the sidelines of the Group of Eight summit scheduled to begin in Northern Ireland this coming Monday. This was to have been the first meeting for the two presidents after their respective re-election to the high office.
As a token courtesy to Putin at a personal and public level, Obama should have deferred the announcement until after meeting Putin. Syria was expected to figure on top of their agenda and Obama and Putin have been closely in touch over Syria.
Geneva 2, the proposed conference on Syria, is a joint Russian-American initiative. By delaying the announcement to next week, the US wouldn't have "lost" Syria. Quite obviously, Obama has made a cool assessment that Putin's friendship is expendable. After all, the discord over missile defense sticks out like a sore thumb in the US-Russia relations and there is no remedy in view.
This, too, is a must read for all students of the New Great Game. It was posted on the Asia Times website yesterday...and it's Roy Stephens' second contribution in a row to today's column.
The ‘red line’ drawn by the U.S. over chemical weapons usage is a standard not applied to Syrian rebels, despite the same ‘red line’ being used for the Syrian government, Abayomi Azikwe, editor of the pan-African news wire, tells RT.
The U.S. is conveniently ignoring accusations that the Syrian rebels themselves might have engaged in crimes against humanity, while throwing blame at Syria for unproven chemical weapon use to justify further military, political and diplomatic pressure against the Syrian government.
This is also required reading for all students of the New Great Game...and it was posted on the Russia Today website early yesterday afternoon Moscow time. It's another offering from Roy Stephens.
Singapore’s monetary authority censured banks for trying to rig benchmark interest rates and ordered them to set aside as much as S$12 billion ($9.6 billion) at zero interest pending steps to improve internal controls.
ING Groep NV, Royal Bank of Scotland Group Plc and UBS AG were among 20 banks at which 133 traders tried to manipulate the Singapore interbank offered rate, swap offered rates and currency benchmarks in the city-state, the Monetary Authority of Singapore said in a statement yesterday. The regulator said it will also make rigging key rates a criminal offense and bring supervision under its direct oversight.
Singapore, seeking to bolster its reputation as a major financial hub, is cracking down amid a widening global review of benchmarks. Bloomberg News reported this week traders manipulated key foreign-exchange rates in the $4.7 trillion-a-day currency market. Barclays Plc, UBS and RBS have been fined $2.5 billion over the past year for rigging Libor.
Well, Singapore's monetary authorities mean what they say...and if the banks are real smart they'll toe the line. This Bloomberg story, filed from Singapore, was posted on their website early yesterday afternoon MDT...and I thank Marshall Angeles for his second contribution to today's column.
China appears increasingly worried that monetary tightening by the US Federal Reserve could trigger capital flight from the People’s Republic and set off a Chinese corporate debt crisis.
A front-page editorial on Friday in China Securities Journal - an arm of the regulatory authorities - warned that capital inflows have slowed sharply and may have begun to reverse as investors grow wary of emerging markets. “China will face large-scale capital outflows if there is an exit from quantitative easing and the dollar strengthens.” it wrote.
The journal said foreign exodus from Chinese equity funds were the highest since early 2008 in the week up to June 5, and the withdrawal Hong Kong funds were the most in a decade.
It also warned that total credit in Chinese financial system may have reached 221pc of GDP, jumping almost eightfold over the last decade. Companies will have to fork out $1 trillion in interest payments alone this year. “Chinese corporate debt burdens are much higher than those of other economies and much of the liquidity is being used to repay debt and not to finance output,” it said.
This absolute must read by Ambrose Evans-Pritchard was posted on the telegraph.co.uk Internet site early yesterday afternoon BST...and it's Roy's final offering in today's column.
What do yield-hungry Japanese investors have in common with unicorns and Bigfoot?
Like the latter two, supposed Japanese buyers of U.S. equities and myriad other instruments have been talked and written about to excess, but have yet to materialize. They were supposed to arrive after the Bank of Japan in April moved to aggressively step up its stimulus efforts. The shocking efforts aimed at boosting assets and stoking inflation would leave Japan’s return-starved investors little choice but to set out on a “scavenger hunt for yield,” or so the argument went.
Or not. Data released by Japan’s Ministry of Finance earlier Thursday showed that Japanese investors were net sellers of foreign securities for a fourth consecutive week. In the period running from June 2 to June 8, Japanese investors sold a net 386.9 billion yen ($4.1 billion) of foreign bonds and notes and a net 221.8 billion yen of foreign equities in the week ending June 8, the ministry said.
This marketwatch.com article is another must read story. It...and the Ambrose Evans-Pritchard piece before it...are all the more reason that you should spend the necessary time reading Doug Noland's commentary posted further up in the Critical Reads section. This MarketWatch article was posted on their website very early on Thursday afternoon EDT...and I found it embedded in yesterday's edition of the King Report.
1. Egon von Greyerz [#1]: "Silver is Coiling For a Major Upside Explosion in Price". 2. Citi analyst Tom Fitzpatrick: "Stocks to Plunge as World Enters Massive Bank Panic". 3. Egon von Greyerz [#2]: "Financial Chaos, Disappearing Freedom and Hyperinflation".
France's government has banned sending currency by mail — including coins, cash and all forms of precious metals.
BullionStreet notes that the legislation, which was approved May 23, was not announced by the government at the time and has been little reported on by media outlets.
Published via Legifrance, the law states: “the insertion of banknotes, coins and precious metals is prohibited in mailings, including the insured items, registered items and items subject to formalities certifying deposition and distribution.”
This story has been around the Internet for a week or so now, so it's not really new...but I wanted to see it posted on a more well-known Internet site before I was going to post it in this space. This version of it appeared on the mining.com Internet site yesterday...and it's courtesy of Marshall Angeles.
Sometimes one must see to believe, in this case believe just how massive the raw demand for the shiny, barbarous relic is in China during times of relative monetary stability (in this case the Dragon Boat Festival). Now assume runaway inflation as we saw in 2011 China, which may be unleashed by something as catalytic as the PBOC once again deciding to inject liquidity in its suffocating banking system and to revive growth in the stalling economy.
June 11th, ten thousand people line up in front of a gold shop to buy gold. The buyers lined up during the three day Dragon Boat Festival.
Well, dear reader, here's a story that was posted on the Zero Hedge website yesterday...and I admit that I have my suspicions about it. It's either a wild exaggeration, or patently false. Several readers sent me this article yesterday...and even though there's a link to the original news item [in Chinese] embedded at the end of this ZH posting, I'm not quite buying it. I've never seen 10,000 people [which seems like a gross exaggeration] lined up to buy anything. You can read it for yourself...and make up your own mind. Matthew Nel talked me into posting it, so you can blame him... ))
Roosevelt had only been in office for 101 days and while there was broad bipartisan support for inflationary policies in Congress, it’s safe to say that most of those who voted for FDR never expected him to confiscate private holdings of gold coins, bullion, and certificates.
Roosevelt called the measure a temporary one (it wasn’t), and he followed it up by invalidating gold clauses in private contracts that obligated payment in gold dollars, which had the effect of devaluing the assets of bond and contract holders. Many of these hoarders and slackers purchased gold as a hedge against the (Fed-fueled) inflationary boom of the 1920s and then hung on to it during the Hoover years when his crazed and unprecedented interventions in wages and prices caused a normal market correction to devolve into a depression. Why would they trust Roosevelt any more?
They were smart not to. By January 1934, Roosevelt increased the dollar price of gold from $20.67 to $35, thus devaluing the dollar by 70 percent while increasing the value of gold that the government now owned.
This Zero Hedge piece from yesterday is well worth your time...and I thank Elliot Simon for his last story of the day.
Félix Moreno talks to David Morgan, publisher of The Morgan Report and the proprietor of silver-investor.com. They discuss the bond bubble and the coming collapse of fiat money, the difference between “paper gold” and physical precious metals, fractional reserve in gold markets, the price of gold and silver and why gold is not just another commodity, but rather a monetary metal. They also talk about central bank gold reserves – particularly those of Germany and China.
This 24-minute podcast was recorded on 13 June, 2013...and I found it in a GATA release from yesterday.
A rare, century–old silver certificate bearing the likeness of 19th century politician William L. Marcy was sold to an anonymous buyer for that lofty sum, which auctioneers at Stack's Bowers Galleries say is a record.
"Only two exist of this type, the other being a treasure in the National Numismatic Collection in the Smithsonian Institution," Stack's Bowers said in announcing the sale.
The certificate was issued in 1891, at a time when silver miners, Western mining companies and some Western banks were objecting to the government's decision to adopt a gold standard.
William Jennings Bryan's "Cross of Gold" speech...and the Frank Baum's book "The Wonderful Wizard of Oz" popped into my head the moment I read this short, but very interesting news item. It, and some of the embedded links, are well worth your time...and I thank reader Bill Moomau for today's last story.
The U.S. budget deficit widened in May from a year earlier on a 10 percent increase in spending, the Treasury Department said.
Outlays exceeded receipts by $138.7 billion last month compared with a $124.6 billion shortfall in May 2012, the Treasury said today in Washington. The gap was in line with the $139 billion median estimate in a Bloomberg survey of 23 economists.
The Congressional Budget Office last week said that spending in May would’ve been $4 billion less than a year earlier were it not for shifts in the timing of payments compared with May 2012. The U.S.’s AA+ credit-rating outlook was increased this week to stable from negative by Standard & Poor’s based on receding fiscal risks, less than two years after the company stripped the world’s largest economy of its top ranking.
Its credit outlook raised from negative to stable? Surely you jest? The U.S. rating agencies are even bigger whores than I thought. Today's first story is one that I found in yesterday's edition of the King Report.
Federal Reserve Chairman Ben S. Bernanke has repeatedly said a reduction in the Fed’s $85 billion in monthly bond purchases wouldn’t mean an end to record easing. Investors are behaving as if they don’t believe him.
The yield on the 10-year Treasury note has risen to 2.15 percent, an almost 14-month high, from 1.63 percent on May 2 as investors bet the Fed will begin trimming bond buying. The surge is undermining Bernanke’s unprecedented effort to hold down borrowing costs and combat 7.6 percent unemployment.
“They are playing with fire when they want to talk about tapering but don’t explain how it fits in with the rest of the exit strategy clearly,” said Gapen, a senior U.S. economist at Barclays Plc. “You risk the premature tightening that you want to avoid.”
This Bloomberg story, courtesy of U.A.E. reader Laurent-Patrick Gally, was posted on their website yesterday afternoon MDT.
Home repossessions in the U.S. jumped 11 percent in May after declining for the previous five months as rising prices and limited inventory for sale across the country spurred banks to complete foreclosures.
Lenders took back 38,946 homes, up from 34,997 in April, according to Irvine, California-based data firm RealtyTrac, which tracks notices of default, auction and seizures. Thirty-three states had increases in the number of homes repossessed, RealtyTrac said in a report today.
Banks are more willing to move to the final stage of foreclosure because there is sufficient demand and prices are improving, said Eric Workman of Tinley Park, Illinois-based Mack Cos., which aggregates single-family rental homes and resells them to individuals and institutional investors. U.S. home prices advanced almost 11 percent in the year through March, the biggest 12-month gain since April 2006, according to the S&P/Case-Shiller index of values in 20 cities.
“For a very long period of time, the market in general and specifically banks were unsure of what these assets were valued at,” Workman, vice president of sales and marketing at Mack, said in a telephone interview. “With increasing stability of the economy and housing prices throughout the U.S., these banks and sellers are getting much more comfortable with the value of their properties.”
This is the second Bloomberg story in a row from reader Laurent-Patrick Gally. This one was posted during the Denver lunch hour yesterday...and it's worth reading.
Former U.S. banking regulator Sheila Bair, a champion of forcing big bank breakups, used a self-interview in Vox to attest that protecting taxpayers from the reckless behavior of financial behemoths is far from completed.
In a sometimes humorous exchange with herself, Bair, former head of the FDIC, said the ideal American banking system would be smaller, simpler, less leveraged and aimed at meeting real credit needs.
"And oh yes, we should ban speculative use of credit default swaps from the face of the planet," she wrote.
According to Bair, the banks themselves are managing the financial reform process in Washington by outgunning the efforts of government regulators.
She noted the industry is already trying to undermine a Dodd-Frank requirement that lenders be exposed to 5 cents of every dollar of loss on mortgages they securitize, and that opaque inter-connectedness between mega-banks is still a reality.
The link to this must read Vox commentary by Sheila Bair is embedded in this moneynews.com article from late yesterday morning EDT...and I thank West Virginia reader Elliot Simon for sending it along.
Italy’s simmering revolt against Germany, austerity and its own ultra-European elites is coming to a head again, in a reminder that the deep clash of interests between the euro’s north and south remains as bitter as ever.
Something snapped in the Italian psyche last week after the European Central Bank offered nothing to combat the credit crunch asphyxiating small business, and more broadly washed its hands of Euroland’s incipient deflation crisis and catastrophic wastage of its youth.
The next day ex-premier Silvio Berlusconi called for a showdown, or “Braccio di Ferro”, with northern powers before it loses it chemical, car and steel industries altogether.
Mr Berlusconi told Il Foglio that Italy’s government - which his Liberty Party keeps in office - is complicitly serving forces that are destroying Italy. It must instead confront the north, “and particularly Angela Merkel’s Germany”, with a stark choice: either they call a halt to fiscal and monetary contraction, and opt instead for full-blown reflation; or they must expect the victims to snatch back their own destinies.
This Ambrose Evans-Pritchard offering was posted on the telegraph.co.uk Internet site late on Wednesday afternoon BST...and it's definitely worth reading. I thank Roy Stephens for his first offering in today's column.
Earlier this week, European Justice Commissioner Viviane Reding vented her fury over the US data spying program known as Prism. The far-reaching online surveillance operation, which saw the US National Security Agency spying on users across the globe, clearly demonstrates "that a clear legal framework for the protection of personal data is not a luxury, but is a fundamental right," Reding told SPIEGEL ONLINE on Tuesday.
Just two days later, however, it would seem that Reding was perhaps protesting a bit too much. According to both the Financial Times and Reuters, the European Commission bowed to US lobbying in early 2012 and scrapped a data protection measure that would have significantly reduced the NSA's ability to spy on Europeans.
According to the Financial Times report, which cites EU documents and unnamed EU officials, the measure was specifically designed to ward off US efforts to eavesdrop on international phone calls and emails. It was even called the "anti-FISA clause," a reference to the Foreign Intelligence Surveillance Act. Washington, however, launched a significant lobbying effort to get the Commission to remove the clause -- which it then did, partly in order to smooth the way ahead of talks on the trans-Atlantic free trade agreement. "We didn't want any complications on this front," an EU official told the Financial Times.
This amazing story showed up on the German website spiegel.de early yesterday afternoon Europe time...and it's Roy Stephens' second offering in a row.
Unbounded by "legal restrictions", Snowden was certainly smart enough to smell a rat, major rats. After the Clapper denial, he could not possibly trust congress. Not to mention the parroting US mainstream media. He did contact the Washington Post - but eventually settled on Glenn Greenwald, who's definitely not mainstream. The UK Guardian's position is more dubious; it badly wants to crack the American market, but at the same time solemnly ditched, even smeared, Julian Assange after it got what it wanted from him.
Snowden is surfing the PR tsunami as a master - and controlling it all the way. Yes, you do learn a thing or two at the CIA. The timing of the disclosure was a beauty; it handed Beijing the ultimate gift just as President Obama was corralling President Xi Jinping in the California summit about cyber war. As David Lindorff nailed it,  now Beijing simply cannot let Snowden hang dry. It's culture; it's a matter of not losing face.
And then Snowden even doubled down - revealing the obvious; as much as Beijing, if not more, Washington hacks as hell.
This short commentary by Pepe was posted on the Asia Times website yesterday sometime...and it's also courtesy of Roy Stephens. It's also worth the read.
For weeks, Japan's stock market has been in an absolute freefall.
Wednesday night the Nikkei fell to 12,445, down 6.4%. But it wasn't long ago that commentators were rejoicing in Abenomics – the policy moniker for Japan's monetary stimulus and government spending plan – for its bold three-pronged approach to juice the Japanese economy.
Now, with the Nikkei taking a turn for the worse and the yen strengthening, it appears Abenomics has not had the intended effect.
Felix Zulauf, Swiss hedge fund manager and macro thinker, goes even further. He thinks Japan will spark a global crisis within the next 18 months.
This businessinsider.com story from late yesterday morning EDT is courtesy of Roy Stephens as well...and it's his last contribution to today's column.
While the full court press propaganda express in Japan's media that 'Abenomics' is working may be flagging a little in the face of the recent 20% collapse in equity prices, there appears no limit to how low they will stoop.
It's not the first time young girls have been used to promote the benefits of buying Japanese bonds but, as The Telegraph reports, a four-member band of 16-year-old Japanese girls will be raising (and lowering we suppose) the length of their skirts based on the Nikkei 255. The band - Machikado Keiki Japan, which roughly translates as "street corner economic conditions", debut single - Abeno Mix (seriously!) - has karaoke references to quantitative easing and construction bonds.
You couldn't make this stuff up. This Zero Hedge piece from yesterday is well worth your time...and I thank Laurent-Patrick Gally for his last offering in today's column.
1. John Hathaway: "Gold to Shock the World With Rapid $1,000 Advance". 2. Keith Barron: "Coming Chaos, Phony Global Markets and the War on Gold". 3. Gerald Celente: "QE, Gold, Silver and the Coming Financial Collapse".
It appears to have finally sunk in. The steps taken by the Indian government on gold have started yielding results, with imports of the precious commodity plunging in India, the world's biggest gold consumer.
Net gold imports averaged $135 million a day, in the first 13 business days in May till May 20. However, in the subsequent 14 business days, it averaged only $36 million, coming down sharply.
Moreover, the demand for foreign exchange for gold purchase too appears to have gone down significantly in the past five-seven days.
This mineweb.com story, filed from Mumbai, was posted on their website early this morning in London...and is a must read.
Mining company consultant and market analyst Peter Grandich today tells Al Korelin of the Korelin Economics Report that with all other markets now shown to be manipulated, anyone who thinks that the gold market is not manipulated should call him about a bridge he'd like to sell.
Of course monetary metals in possession -- wealth without counterparty risk -- may be the last refuge of reality, and Grandich, angry as he is, says he still believes that fundamentals will assert themselves. His interview is a little less than five minutes long and it can be heard at the Korelin Economics Report Internet site. I found this interview embedded in a GATA release yesterday...and I thank Chris Powell for wordsmithing the introduction for us.
Canadian junior mining companies, which do most of the resource exploration in the world, are being strangled by financial regulation and must mobilize to survive, a new organization says.
The organization, the Venture Company Association, says regulatory costs are rising while the mining industry's ability to raise capital is collapsing. The association says that more than 700 mining exploration companies registered in Canada probably cannot survive to the end of the year if they have to meet current regulatory requirements.
A founder of the organization, Joe Martin of the resource conference company Cambridge House, writes in the organization's initial appeal:
"Markets go up and markets go down but this 'double whammy' may well bring about the death of the great historical tradition Canada has achieved in becoming the No. 1 nation in finding mineable ore bodies and bringing them into production around the world.
Joe Martin spoke to me briefly about this new organization when I was at his Vancouver Resource conference last month. It's definitely worth reading...and is another news item I found in a GATA release yesterday.
Kinross Gold Corp. said on Monday it is halting development at its Fruta del Norte gold project in Ecuador after failing to reach an agreement with the government over a windfall tax on revenues.
Chief Executive Paul Rollinson said Ecuador had refused to budge on the 70-per-cent tax, and had indicated that it would not approve a sale or extend the company's license beyond an Aug. 1 deadline.
"It's been a tough negotiation," Mr. Rollinson told Reuters. "Sometimes the best deal is the one that you don't sign, and that seems to be the case here."
The move is a blow to Ecuador, where the government is drafting a new mining law meant to encourage investment. Ecuador does not have a significant mining sector, but it is largely unexplored and could have major deposits.
This story appeared in The Globe and Mail on Monday...and is another story I found embedded in a GATA release yesterday.
There's no way to sugarcoat the dismal performance of the precious metals in recent months. But a revisitation of the reasons for owning them reveals no cracks in the underlying thesis for doing so.
In fact, there are a number of new compelling developments arguing that the long heartbreak for gold and silver holders will soon be over.
The past two years have not been kind to holders of the precious metals. The price of gold is down over $500/oz since the record high (nominal) price it hit in August of 2011. That's a decline of 28%. Silver has seen a decline of 56% over the same period.
A healthy amount of that decline came in the past seven months, which have pretty much seen a steady price deflation punctuated by sharp (and historic) downdrafts.
This is Part One of a two-part commentary...and you have to sign up/enroll [not for free] to read the real meat of this article, which I suspect is in Part Two. It was posted on the peakprosperity.com Internet site late on Wednesday evening.
This 9-photo slide show was posted on the Economic Times of India website the other day...and I thank Elliot Simon for digging it up for us.
Interviewed by GoldMoney's Andy Duncan, Sprott Asset Management's John Embry discusses the increasingly desperate manipulation of the gold market by Western central banks, the hard choice ahead between debt deflation and hyperinflation, the demoralization of the monetary metals sector, the transfer of gold from West to East, the prospect of a sharp upward revaluation of gold, and the valuable news and commentary published at the Zero Hedge Internet site.
The interview, which was recorded on 11 June 2013, is 17 minutes long, and is posted at GoldMoney's Internet site. It's another news item I picked up in a GATA release yesterday...and it's a must listen for sure.
Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.
Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.
The behavior occurred daily in the spot foreign-exchange market and has been going on for at least a decade, affecting the value of funds and derivatives, the two traders said. The Financial Conduct Authority, Britain’s markets supervisor, is considering opening a probe into potential manipulation of the rates, according to a person briefed on the matter.
So...what else is new? Today's first story was posted on the Bloomberg website at noon Mountain Daylight Time...and I thank U.A.E. reader Laurent-Patrick Gally for sending it along.
Britain should investigate the manipulation of currency rates, European Union officials said after Bloomberg News revealed that traders have been rigging foreign-exchange benchmarks for more than a decade.
“They need to get to the bottom of it,” Sharon Bowles, 60, chairwoman of the European Parliament’s economic and monetary affairs committee and a member of the U.K. Liberal Democrat party, said in an interview. “It’s quite upsetting we have got another bad-news story. It’s time we managed to restore the reputation of our banks.”
The U.K. Financial Conduct Authority, created in April to oversee markets and prosecute financial crime, is looking into potential manipulation in the $4.7 trillion-a-day foreign-exchange market, a person briefed on the matter said. Bloomberg News reported yesterday that traders at some of the world’s biggest banks rigged benchmark WM/Reuters rates, according to five current and former dealers with knowledge of the practice.
One wonders if the precious metals price fixing scheme by JPMorgan et al will every get this sort of scrutiny? This Bloomberg news item was filed from London...and posted on their website early yesterday evening Denver time. It's Laurent-Patrick Gally's second of three stories in a row in today's column.
The past few weeks have given us a hint of what might happen when the Federal Reserve starts to reverse its super-easy monetary policy. Expect turbulence in financial markets, especially for assets that have moved far above normal or reasonable valuations.
A return to normality eventually implies a benchmark 10-year Treasury yield of 4 percent or more. It won’t happen all at once, but that’s where we’re heading. With yields at roughly 2.2 percent, there’s a long way to go. This transition will mark a recovery of the equity culture and the cooling of investors’ protracted love affair with bonds.
Because of this prospect, markets are sensitive to the merest whiff that Fed Chairman Ben S. Bernanke might be forced by colleagues on the Federal Open Market Committee to reduce the scale of quantitative easing. This nervousness has affected asset prices across the maturity spectrum, not just at the short end of the money market as you might expect.
This Bloomberg story, as I mentioned above, is also courtesy of Laurent-Patrick Gally...and it was posted on their website late Tuesday afternoon MDT.
The German Constitutional Court is not interested whether the European Central Bank's (ECB) actions in the euro-crisis were successful, but whether they were legal, the court's top judge said on Tuesday (11 June) in a public hearing.
"Otherwise the end alone would justify the means," Andreas Vosskuhle, the presiding judge, noted.
In the run-up to the hearing, ECB chief Mario Draghi had called his bank's bond-buying programme "the most successful monetary policy undertaken in recent time."
This news item, filed from Berlin yesterday, was posted on the euobserver.com Internet site yesterday...and is worth skimming. I thank Roy Stephens for his first offering in today's column.
This past March, Jeroen Dijsselbloem, the head of the finance ministers of the eurozone, shocked the markets with seemingly off-the-cuff comments suggesting that the Cyprus banking solution will, "serve as a model for dealing with future banking crises." Depositors across Europe took a collective gasp of horror – could banks possibly confiscate depositors’ funds in a form of daylight robbery? Indeed they could, and last week the Bank for International Settlements (“BIS”), the Central Bank's Central Bank, published what we have referred to as 'the template'; a blueprint outlining the steps to handle the failure of a major bank and the conditions to be met before ‘bailing-in’ deposits.
In their recently published paper "A Template For Recapitalising Too-Big-To-Fail Banks", authors Paul Melaschenko and Noel Reynolds argue for a “simple” mechanism to recapitalize failed banks without the use of taxpayers' money. They propose a process whereby a bank, if it reached the point of failure, could transfer ownership to a newly created holding company over a weekend and be recapitalized. The bank would then be sold, enabling the market to determine the ultimate losses to previous equity holders and creditors. And, yes, this scenario includes losses for depositors above a guaranteed limit. Presto! A new bank with a clean balance sheet, ready to receive liquidity support from the prevailing central bank, without the need for handouts, bailouts, TARP programs, or any other form of government assistance. Previous debt and equity holders and depositors of this failed bank would be left with an equity position in the new entity. This 'template' would ensure that "shareholders and uninsured private sector creditors (read: depositors and bond holders) of such banks, rather than taxpayers, bear the cost of resolution." While at the moment this framework is only outlined in a discussion paper, it confirms our suspicions. While the old template involved “bailing out” banks through the transfer of toxic assets from the corporate sector to the taxpayer, the new template calls for “bailing in”. In this model the risk is contained within the affected institution at the expense of equity holders, bond holders and finally depositors. Far from being an idle comment, the unscripted 'bomb' that Mr. Dijsselbloem dropped on the market during the Cyprus Banking crisis is on its way to becoming a reality across Europe and other major banking centers.
This must read commentary by Eric Sprott and David Franklin was posted on the sprottgroup.com Internet site yesterday.
Greece became the first developed nation to be cut to emerging-market status by MSCI Inc. after the local stock index plunged 83 percent since 2007.
Greece failed to meet criteria regarding securities borrowing and lending facilities, short selling and transferability, said MSCI, whose equity indexes are tracked by investors with about $7 trillion in assets. Qatar and the United Arab Emirates were raised to emerging markets, while Morocco was cut to a frontier market. New York-based MSCI kept South Korea and Taiwan as emerging markets, and placed Chinese shares traded on local exchanges on review for inclusion in the emerging category, according to a statement yesterday.
The ASE Index fell 1.4 percent to 882.99 at 1:49 p.m. in Athens. The gauge has dropped 10 percent this week as Greece failed to win any bids in a sale of the country’s gas monopoly. The unsuccessful attempt to sell Depa SA dented Greece’s state-asset sales program, which underpins 240 billion euros ($318 billion) of bailout loans from the euro area and International Monetary Fund.
This rather amazing story was posted on the Bloomberg Internet site in the wee hours of yesterday morning...and it's courtesy of Casey Research's own John Grandits.
With his efforts to quash the protest movement on Taksim Square in Istanbul on Tuesday, German editorialists fear Turkish Prime Minister Erdogan has become an "autocrat." Some argue he is threatening his country's very future.
Istanbul's most important square was clouded in tear gas and drenched by water cannons as police moved to clear it of protesters on Tuesday, escalating tensions that have been brewing since demonstrators began camping out at the site two weeks ago. Dozens of injuries have been reported by demonstrators.
By Wednesday morning, only police and bulldozers could be seen on Taksim Square, and barricades and debris from the protests had already been cleared away. Although local officials had assured they didn't want to clear the protest camp at Gezi Park, activists claimed police surrounded it and pelted it with tear gas canisters during the night. Hundreds remain camped out in the park.
The German press tees off against Turkish P.M. Erdogan in this short spiegel.de piece from yesterday afternoon Europe time...and it's courtesy of Roy Stephens.
There are more journalists in prison in Turkey than in any other country. Prime Minister Erdogan tolerates no criticism, and aggressive prosecution of journalists on often questionable charges has fostered an atmosphere of anxiety and self-censorship.
It was mostly angry office workers from Istanbul's Maslak banking district who appeared on Monday, June 3, during their lunch break at the editorial offices of the NTV news channel. "Stop acting as if nothing were happening," they chanted, as they railed against what they called the "bought media." "We can pay you, too," the roughly 3,000 demonstrators shouted, mocking the NTV employees who had managed to completely ignore the anti-government protests that had already been going on for three days. The protestors had glued Turkish lira bank notes to their banners.
The editors at CNN Türk also fell short of expectations. While CNN International showed live images of the dramatic clashes between police and protesters, the Turkish channel aired a documentary about penguins. Many newspapers complied with the de facto news blackout. Whether the journalists were following government instructions or simply suppressing the news in an act of preemptive obedience is still unclear.
I heard on the news last night that two Canadian journalists with the CBC were arrested in Istanbul yesterday...and their fate remains unknown. This is another story from the German website spiegel.de...and I thank Roy Stephens for sending it along late yesterday morning.
The crackdown against protesters in Istanbul by the Turkish government creates a dilemma for the EU. The Europeans don't want to tolerate violence against demonstrators, but they also don't want to lose Erdogan as a partner.Once again, images of violence in Istanbul have been broadcast to living rooms across Europe. They showed Turkish police advancing on Taksim Square during the night with bulldozers and water cannons. For hours, officers in riot gear engaged in street fighting with protesters. On Wednesday morning, the remnants of those clashes could be seen on the cleared square.
The drastic measures taken by the government of Prime Minister Recep Tayyip Erdogan have created a dilemma for Turkey's partners in the European Union. Since the escalation of the civil protests at Gezi Park at the end of May, the Europeans have been helplessly observing as events unfold. Besides an appeal or warning here and there, so far there has been no substantial reaction from Brussels, Berlin, Paris or London.
They are worried that the violent excesses in Turkey could destroy progress made in recent months. After years of stalling, diplomats had worked painstakingly to get talks over Turkey's future European Union accession back on track. On June 26, EU foreign ministers had hoped to open a new chapter in accession talks with Turkey for the first time in three years. It would be the 19th of 35 chapters that must be completed before Ankara can join the European club.
This is another article from the spiegel.de website on Wednesday...and it's worth reading. I thank Roy Stephens for his final contribution to today's column.
The first of two interview with James Turk is headlined "A Summer Gold and Silver Explosion That Will Shock the World". The second James Turk interview bears the title "A Massive Black Swan is Going To Rock World Markets". The third commentary is by Jeffrey Saut. It's entitled "What We Are Witnessing Right Now is Historic and Unprecedented".
Following last night's revelation that FX trading is the latest addition to the "rigged" column, here is a summary of the known market manipulation scandals (because it can be problematic keeping track of all by now):
We also know that the Fed and world central banks are engaged in a full blown (and unprecedented) Treasury curve modeling exercise courtesy of both ZIRP (short-end) and QE (long-end), and that courtesy of some $12 trillion in extra liquidity in the past 5 years, stocks are at an artificial "wealth effect" sugar high.
We can therefore deduce that, following the process of elimination, gold and silver are the only markets that are un-manipulated and where transparent price discovery is allowed to take place without intervention from key players.
This is all there is to this short Zero Hedge commentary from yesterday...and I thank Washington state reader S.A. for bringing it to our attention.
Beginning in the 1970s, countries around the world led by the United States began pursuing monetary policies that no longer encouraged savings. The relatively sound money that had previously prevailed, when it was said that the “dollar was as good as gold”, gave way to deplorable policy that ushered in decades of money debasement. Currency as a consequence has lost purchasing power over time, and the interest that banks pay on savings accounts has not sufficiently compensated the saver. In other words, even though the nominal value of a savings account rose from the interest income being earned, the overall purchasing power of the money being saved was losing value.
How can you save money today when central bank and government policy result in the erosion of your purchasing power when saving any national currency?
The answer lies in the money being saved. Save gold and/or silver instead of any national currency.
This short commentary by James was posted on the goldmoney.com Internet site yesterday...and it's worth reading.
The tiny Southeast Asian city-state Singapore has transformed itself into one of the world's top financial hubs and has now set its sights on turning the wealthy island into a gold bullion center.
A step in that direction came this week when Deutsche Bank opened its second-largest gold storage facility in the world in Singapore.
"If you look at the existing primary locations of London, Zurich and New York, these are clearly Western-centric," Mark Smallwood, head of APAC wealth planning at Deutsche Asset and Wealth Management said Wednesday. "The launch is really part of the story of Singapore, and about a story of evolving storage facilities for gold bullion."
I posted a story about this a couple of days ago, but this article that showed up on the CNBC website in the wee hours of yesterday morning EDT, expands on it by quite a bit. It falls into the must read category...and I thank West Virginia reader Elliot Simon for bringing it to our attention.